Opinions on paying off a student loan in full; lump sum payment? Next year I'm considering paying off the balance of my $6000 SL.
It depends on your objectives, of course. You don't say whether the loan is in default or not, which seems relevant. Is your question FICO related, or is it money management related?
So help us a bit, in order to help you. Are you asking if a single payment will help more than a series of payments, raising your FICO more? It is important to remember that FICO is more driven by revolving accounts than by installment accounts. SL's are installment accounts. So for clean reports, FICO does not move much when an installment account is paid, no matter how it is paid: all at once or over time. For a revolving account, which a SL is not, there are lots of ideas about when and how to pay off an account. Does that help?
Yes this help. So basically the only thing it is going to do for me is get rid of that nagging $100 payment each month.
It depends. For an otherwise clean report, especially if the SL is reporting positive, then yes, it will only get rid of your monthly payment, probably won't help FICO at all.
The only thing I would add is sometimes the creditor holding the note can be a deciding factor.My wife had sallie mae for a consolidation loan and we were more than happy to ditch them. No negatives on the loan but have heard horror stories about them and would rather just pay them off and kick them to the curb.
For pure financial reasons, you may want to speak to the lender and see if you can negotiate a reduction for full early payment. Sometimes they will do this. You will also save some money due to saving interest cost by paying a lump sum. Paying it off will also help if you plan to purchase a home within the next five years (projecting your payoff period). Your total monthly expenses will be reduced. Another financial tip here, pay the full amount only if you have some savings leftover, specifically an "emergency fund" (recommended amount = 2-6 months of living expenses). Don't leave yourself short on a safety net, pay yourself first!
Preserving some emergency cushion thru locked in, patient debt is safer than having to scramble for whatever you can find if you paid off all debt at the expense of having any emergency fund. Planning ahead includes an emergency fund.
We already own a home, we have a 401K (for all of our employment history we have been investing in a 401K), IRA and other investments. I'm also vested with a former employer for a pension. We are wonderful with money management. Just had some debts from my past I needed to clean up.
Then by all means pay it off, it will improve your personal balance sheet. I would still try to negotiate a prepayment discount, but that is just my style!
The deciding factor that you asked me to clarify is this: 1.What is creditor's overall reputation? 2.How effective is their customer service department? 3.Do you trust them? 4.Do they have a clue what needs to be reported to credit bureaus? For some of the above,we did not like Sallie Mae holding her note,so we pif and got them away from our overall financial picture.
